Executive Summary. 1 The Pearson s correlation coefficient between the number of metal theft claims per month and the average monthly copper price was

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1 Date: Regarding: Metal Theft Claims and Questionable Claims from uary 1, 2009 to ember 31, 2011 Prepared By: Joe Kudla, Strategic Analyst This ForeCAST SM report analyzes copper, bronze, brass, and aluminum theft claims identified in ISO ClaimSearch and NICB Questionable Claims (QCs) from uary 1, 2009 to ember 31, 2011 in order to identify any trends or patterns that may exist in the data. Executive Summary There were a total of 25,083 claims identified for the theft of copper, bronze, brass, or aluminum submitted to ISO ClaimSearch between uary 1, 2009 and ember 31, Of the 25,083 total claims, 96.1% pertained to the theft of copper. Fifty-five percent of the claims were on commercial policies, while 45% were on personal policies. When the number of metal theft claims per month and monthly average copper prices are compared, the number of claims filed is found to have a statistically significant correlation with the price of copper. 1 From uary 1, 2009 to ember 31, 2011, there were 237 NICB Questionable Claims submitted involving the theft of copper, aluminum, brass, or bronze. Of the 237 total Questionable Claims, 94.5% pertained to the theft of copper. Sixty-six percent were on personal policies, while 31% were on commercial policies. Ohio was the loss state in the most metal theft claims in ISO ClaimSearch, with 19% more claims than Texas, the state with the 2nd largest number of claims. However, in Questionable Claims Ohio ranked 4th, while Illinois topped the rankings. Illinois had 62% more QCs than Texas, the 2nd ranked state in Questionable Claims. When ranked by number of ISO ClaimSearch metal theft claims per 10,000 residents, Rhode Island tops the rankings, followed by Ohio and Delaware. Rhode Island had 25% more metal theft claims per 10,000 residents than Ohio did. The number of claims per 10,000 residents by state was found to be correlated 2 with estimated state drug abuse/dependence rates. The Chicago-Naperville-Joliet, IL-IN-WI Core Based Statistical Area (CBSA) 3 had both the largest number of ISO ClaimSearch metal theft claims and NICB Questionable Claims. The New York-Northern New Jersey- Long Island, NY-NJ-PA CBSA ranked 2nd in ISO ClaimSearch metal theft claims, while Atlanta-Sandy Springs-ietta, GA ranked 2 nd in NICB Questionable Claims. 1 The Pearson s correlation coefficient between the number of metal theft claims per month and the average monthly copper price was.903 (significant at the.001 level). 2 The Pearson s correlation coefficient between the number of metal claims per 10,000 residents by state and the estimated 2009 percentages of drug abuse/dependence of individuals 12 and older was.263 (significant at the.063 level). 3 Core Based Statistical Areas (CBSAs) are defined by the United States Office of Management and Budget. CBSAs consist of a core urban area with a population of at least 10,000 and the surrounding communities that have strong economic and social ties to the core area.

2 Page 2 of 11 Metal Theft Overview Law enforcement agencies across the country and around the globe had been seeing increased numbers of thefts of metals such as copper, bronze, brass, and aluminum in the years leading up to economic downturn in Metal prices have risen once again, and so have the number of reported metal thefts. Thieves have been willing to go to almost any length to obtain the metal. They have stripped sheets of metal from building rooftops, stolen memorial decorations from cemeteries, ripped apart air conditioners for the copper coils within, and stripped homes and buildings of wiring and piping. Construction sites are frequent victims because metal is often left on site unguarded and relatively unsecured. Farm equipment such as irrigation pipes and fixtures are also targeted. The thieves can endanger the safety of themselves and those in the surrounding community, and weaken the infrastructure vital to our everyday lives. Unoccupied buildings have exploded due to gas lines being stolen, stretches of highway have been left dark after thieves stole wiring from utility poles, and tornado warning sirens have been rendered inoperable due to wiring being stolen. Thieves have removed wiring from traffic and railway signals and even posed as utility workers in order to remove large sections of thick utility cable from the sewers beneath city streets. Some thieves have been electrocuted trying to steal live electrical wiring. The thieves are often drug addicts and steal these materials to sell them to scrap dealers and net themselves some quick cash. In other cases, the crimes are committed by organized groups or opportunistic thieves, such as employees of businesses that work with metal. Frequently the damage caused by such thefts is several times the value of the metal stolen, leaving the victims with hefty repair costs which are often passed on to insurance companies. The U.S. Department of Energy has estimated that metal theft costs U.S. businesses around $1 billion a year i. Some states and cities have taken measures to combat metal theft, such as requiring scrap yards to check identification of any individual who sells them scrap metal, note the license plate of the vehicle used to transport the metal, maintain the information on file, pay the seller with check instead of cash, or retain the scrap metal for a designated amount of time to allow law enforcement an opportunity to identify stolen materials before it is recycled. However, identifying stolen metal is not always possible and opposition to these laws from the scrap industry has made it difficult to get effective measures passed in some areas. Even in areas where such laws exist, some unscrupulous scrap dealers do not abide by them and enforcement of the laws has not always been a major priority until recently when increases in metal thefts brought more attention to the problem. Some states and local governments have increased the penalties associated with metal theft or are charging thieves with additional crimes if the theft caused damage to infrastructure or created a hazard to the public. These are just a few examples of the measures put in place to try to reduce the incidence of metal theft. Metal Theft Claims in ISO ClaimSearch This section of the report analyzes the claims identified in ISO ClaimSearch as involving the theft of copper, aluminum, brass, or bronze. ISO ClaimSearch is a database designed to help insurers, self-insurers, law enforcement agencies, and state fraud bureaus detect and prevent fraud, evaluate risk, and process meritorious claims by providing a central repository of claims. Insurers and other agencies with access can query this database to research prior loss histories, identify claims patterns, and detect suspect claims.

3 Page 3 of 11 A total of 25,083 claims for the theft of copper, bronze, brass, or aluminum were identified in ISO ClaimSearch between uary 1, 2009 and ember 31, Of the 25,083 total claims, 24,103 related to copper, 817 to aluminum, 172 to brass, and 130 to bronze 5. There were 13,714 commercial policy claims (55%), while 11,359 (45%) were on personal policies 6. The following tables show the number of claims containing common keywords identified in the data 7 and the number of claims relating to each metal: Common Keywords Claims Metal Type Claims pipe or piping 5,648 Copper 24,103 a/c or ac or air cond 4,034 Aluminum 817 wire or wiring 4,716 Brass 172 plumbing 2,853 Bronze 130 tube or tubing 621 line 711 coil 306 roof 361 The following chart shows the number of metal theft claims per month for the uary 1, 2009 through ember 31, 2011 time period. It should be noted that that there is often a delay before claims are entered into ISO ClaimSearch, and therefore some months may be underrepresented in the data, particularly ember and ember ,400 1,200 1, Metal Theft Claim in ISO ClaimSearch by Month ,033 1,023 1,098 1,070 1,096 1,167 1, There is no exact method for extracting metal theft claims from ISO ClaimSearch. For this report, a claim was determined to be a metal theft claim if the loss description for the claim contained copp, brass, bronz, or alum, as well as one of the terms stole, theft, thief, thieves, took, steal, or missing. Loss types that were seen to include almost exclusively unrelated claims were filtered from the data, as well as claims that contained terms found to result in false positives. It should also be noted that slightly different metal terms were used than in previous years reports. This change was made in order to compile a more complete dataset. 5 Some claims contained more than one of the metal terms claims listed policy types that could not be identified as either commercial or personal in nature. 7 Some claims may contain more than one of the keywords identified, while others may not contain any. 8 Note: There was an average delay between a claim occurring and it being entered into ISO ClaimSearch of 48.3 days, therefore the latter months of the data are likely underreported, particularly ember and ember Of the metal thefts reported between 1/1/2009 and 12/31/2011, 1,001 actually occurred prior to 1/1/2009 and were not included in the graph.

4 Page 4 of 11 When compared with the graph of copper prices for the same time period a strong correlation between metal prices and the number of metal theft claims was found to exist 9. USD/lb $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 COMEX Copper Price Monthly Averages $1.48 $1.51 $1.72 $2.05 $2.11 $2.28 $2.39 $2.81 $2.81 $2.88 $3.04 $3.19 $3.34 $3.12 $3.40 $3.52 $3.11 $2.94 $3.06 $3.32 $3.52 $3.77 $3.84 $4.17 $4.34 $4.49 $4.32 $4.30 $4.06 $4.11 $4.40 $4.08 $3.74 $3.34 $3.44 $ The following chart shows the 10 loss states associated with the most metal theft claims in ISO ClaimSearch 10 : Top Ten States with Most Metal Theft Claims ( ) Ohio 2,398 Texas 2,023 Georgia California Illinois North Carolina Pennsylvania New York Florida Michigan 1,481 1,348 1,284 1,205 1,130 1,121 1,110 1,102 Ohio was the state with the greatest number of metal theft claims in ISO ClaimSearch, followed by Texas and Georgia. 9 Copper price data was obtained from The Pearson s correlation coefficient between the number of metal theft claims per month and the average monthly copper price was.903 (significant at the.001 level). 10 Note: 23 claims did not have the loss state field populated or it was populated with invalid entries.

5 Page 5 of 11 The following table, in alphabetical order by state, shows the number of claims per state for all 50 states and the District of Columbia, as well as the number of claims per 10,000 residents: State Claims Population Claims / 10,000 Residents Alabama 615 4,802, Alaska 3 722, Arizona 518 6,482, Arkansas 420 2,937, California 1,348 37,691, Colorado 220 5,116, Connecticut 460 3,580, Delaware , District of Columbia , Florida 1,110 19,057, Georgia 1,481 9,815, Hawaii 12 1,374, Idaho 19 1,584, Illinois 1,284 12,869, Indiana 559 6,516, Iowa 110 3,062, Kansas 237 2,871, Kentucky 778 4,369, Louisiana 392 4,574, Maine 166 1,328, yland 480 5,828, Massachusetts 667 6,587, Michigan 1,102 9,876, Minnesota 224 5,344, Mississippi 120 2,978, Missouri 885 6,010, Montana 6 998, Nebraska 104 1,842, Nevada 219 2,723, New Hampshire 125 1,318, New Jersey 767 8,821, New Mexico 115 2,082, New York 1,121 19,465, North Carolina 1,205 9,656, North Dakota 5 683, Ohio 2,398 11,544, Oklahoma 262 3,791, Oregon 46 3,871, Pennsylvania 1,130 12,742, Rhode Island 272 1,051, South Carolina 496 4,679, South Dakota 5 824, Tennessee 361 6,403, Texas 2,023 25,674, Utah 103 2,817, Vermont , Virginia 363 8,096, Washington 138 6,830, West Virginia 95 1,855, Wisconsin 207 5,711, Wyoming 4 568, US Census Bureau - Annual Estimates of the Population for the United States, Regions, States, and Puerto Rico: y 1, 2011

6 Page 6 of 11 When ranked by claims per 10,000 residents, Rhode Island moves to the top of the rankings, followed by Ohio and Delaware. The number of metal theft claims by state per 10,000 residents was found to be correlated 12 with estimated rates of drug abuse/dependence per state of individuals 12 or older 13. Of course, there are many factors contributing to the metal theft rates of a given area. Drug abuse may not be the primary factor influencing metal theft, but a correlation was found to exist. The following chart shows the 10 CBSAs in the most metal theft claims in ISO ClaimSearch 14 : Top Ten CBSAs with Most Metal Theft Claims ( ) Chicago-Naperville-Joliet, IL-IN-WI 963 New York-Northern New Jersey-Long Island, NY-NJ-PA 921 Atlanta-Sandy Springs-ietta, GA 823 Dallas-Fort Worth-Arlington, TX 674 Detroit-Warren-Livonia, MI Houston-Sugar Land-Baytown, TX St. Louis, MO-IL Cleveland-Elyria-Mentor, OH Cincinnati-Middletown, OH-KY-IN Philadelphia-Camden-Wilmington, PA-NJ-DE-MD The Chicago-Naperville-Joliet, IL-IN-WI CBSA is the CBSA with the largest number of metal theft claims, followed by the New York-Northern New Jersey-Long Island, NY-NJ-PA CBSA. 12 The Pearson s correlation coefficient between the number of metal claims per 10,000 residents by state and the estimated 2009 percentages of drug abuse/dependence of individuals 12 and older was.263 (significant at the.063 level). 13 SAMHSA, Center for Behavioral Health Statistics and Quality, National Survey on Drug Use and Health, 2008 and Note: 4,070 metal theft claims, 16.2% of the total number, either did not list a loss city or listed one that is not included in a CBSA.

7 Page 7 of 11 Metal Theft Claims Submitted as NICB Questionable Claims NICB member companies can submit claims that they believe may contain some element of fraud to NICB as Questionable Claims. This section of the report analyzes the Questionable Claims identified as involving the theft of copper, brass, bronze, or aluminum. There were a total of 237 metal theft Questionable Claims submitted between uary 1, 2009 and ember 31, Of the 237 total Questionable Claims, 224 related to copper, 14 to aluminum, 4 to brass, and 2 to bronze 16. There were 157 Questionable Claims (66%) on personal policies, while 74 (31%) were on commercial policies 17. The data was queried further to determine which types of items were most commonly stolen. The following tables show the number of claims containing common keywords identified in the data 18 and the number of QCs relating to each metal: Common Keywords QCs Metal Type QCs pipe or piping 130 Copper 224 wire or wiring 92 Aluminum 14 a/c or ac or air cond 39 Brass 4 plumbing 32 Bronze 2 line 31 roof 22 The following chart shows the 5 loss states associated with the most metal theft Questionable Claims 19 : Illinois Top 5 States with Most Metal Theft QCs ( ) 42 Texas 26 California 23 Ohio 20 Georgia 13 Illinois was the state of loss in the largest number of metal theft related NICB Questionable Claims, followed by Texas and California. 15 There is no exact method for extracting metal theft claims from ISO ClaimSearch. For this report, a Questionable Claim was determined to be a metal theft claim if the loss description for the claim contained copp, brass, bronz, or alum, as well as one of the terms stole, theft, thief, thieves, took, steal, or missing. Loss types that were seen to include almost exclusively unrelated claims were filtered from the data, as well as claims that contained terms found to result in false positives. It should also be noted that slightly different metal terms were used than in previous years reports. This change was made in order to compile a more complete dataset. 16 Some claims contained more than one of the metal terms Questionable Claims did not list a policy type. 18 Some QCs may contain more than one of the keywords listed, while others may not include any. 19 Note: 4 Questionable Claims did not have the loss state field populated or it was populated with invalid entries.

8 Page 8 of 11 The following table shows the number of QCs for all 50 states and the District of Columbia, as well as the ratio of QCs to every 1,000 ISO ClaimSearch claims per state. State QCs ISO Claims QCs / 1,000 Claims Alabama Alaska Arizona Arkansas California 23 1, Colorado Connecticut Delaware District of Columbia Florida 7 1, Georgia 13 1, Hawaii Idaho Illinois 42 1, Indiana Iowa Kansas Kentucky Louisiana Maine yland Massachusetts Michigan 9 1, Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York 8 1, North Carolina 7 1, North Dakota Ohio 20 2, Oklahoma Oregon Pennsylvania 9 1, Rhode Island South Carolina South Dakota Tennessee Texas 26 2, Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming The District of Columbia and Illinois had the highest proportion of NICB Questionable Claims to the total number of metal theft claims in ISO ClaimSearch.

9 Page 9 of 11 The following chart shows the 5 CBSAs in the most metal theft Questionable Claims 20 : Top 5 CBSAs with Most Metal Theft QCs ( ) Chicago-Naperville-Joliet, IL-IN-WI 42 Atlanta-Sandy Springs-ietta, GA 12 Houston-Sugar Land-Baytown, TX 10 Los Angeles-Long Beach-Santa Ana, CA 9 Cleveland-Elyria-Mentor, OH 8 Chicago-Naperville-Joliet, IL-IN-WI was the CBSA with the greatest number of metal theft Questionable Claims, with more than 3 times the QCs of the 2 nd ranking CBSA, Atlanta-Sandy Springs-ietta, GA. Conclusions There were a total of 25,083 claims for the theft of copper, bronze, brass, or aluminum submitted to ISO ClaimSearch between uary 1, 2009 and ember 31, Of the 25,083 total claims, 96.1% pertained to the theft of copper, 3.3% to aluminum, 0.7% to brass, and 0.5% to bronze. The commercial policy claims were 55%, while 45% were on personal policies. When the number of metal theft claims and copper prices are compared, a statistically significant correlation was found to be present 21. A total of 237 NICB Questionable Claims were identified as involving the theft of copper, aluminum, brass, or bronze. Of the 237 total Questionable Claims, 94.5% pertained to the theft of copper, 5.9% pertained to aluminum, 1.7% pertained to brass, and 0.8% pertained to bronze. There were 157 Questionable Claims (66%) on personal policies, while 74 (31%) were on commercial policies. One point of interest is that more than half of the ISO ClaimSearch metal theft claims were on commercial policies, however in the Questionable Claims dataset approximately 2 of 3 Questionable Claims were on personal policies. Ohio was the loss state in the most metal theft claims in ISO ClaimSearch, with 19% more claims than Texas, the state with the 2nd largest number of claims. However, in Questionable Claims Ohio ranked 4th, while Illinois topped the rankings. Illinois had 62% more QCs than Texas, the 2nd ranked state in Questionable Claims. When ranked by number of ISO ClaimSearch metal theft claims per 10,000 residents, Rhode Island tops the rankings, followed by Ohio and Delaware. Rhode Island had 25% more metal theft claims per 10,000 residents than Ohio did. The number of metal theft claims by state per 10,000 residents was found to be correlated 22 with estimated rates of drug abuse/dependence per state for Note: 20 metal theft Questionable Claims either did not list a loss city or listed one that is not included in a CBSA. 21 The Pearson s correlation coefficient between the number of metal theft claims per month and the average monthly copper price was.903 (significant at the.001 level). 22 The Pearson s correlation coefficient between the number of metal claims per 10,000 residents by state and the estimated 2009 percentages of drug abuse/dependence of individuals 12 and older was.263 (significant at the.063 level).

10 Page 10 of 11 The Chicago-Naperville-Joliet, IL-IN-WI CBSA had both the largest number of ISO ClaimSearch metal theft claims and NICB Questionable Claims. The New York-Northern New Jersey-Long Island, NY-NJ-PA CBSA ranked 2nd in ISO ClaimSearch metal theft claims, while Atlanta-Sandy Springs-ietta, GA ranked 2 nd in NICB Questionable Claims. i (U.S. Dept. of Energy, 2007)

11 Page 11 of 11 Bibliography International Wire Group. (2011). Price History Index. Retrieved from on uary 19, Substance Abuse and Mental Health Services Administration, Center for Behavioral Health Statistics and Quality. (2011). National Survey on Drug Use and Health, 2008 and Retrieved uary 19, 2012 from U.S. Census Bureau. (2011). Annual Estimates of the Population for the United States, Regions, States, and Puerto Rico: y 1, Retrieved uary 19, 2012 from U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability. (2007). An Assessment of Copper Wire Thefts from Electric Utilities. Retrieved uary 20, 2012 from